Rent aid program covering the bulk of Nebraska hits a snag as it sunsets
OMAHA — Tanya Gifford of Lift Up Sarpy County was thrilled this summer to learn that her nonprofit was awarded $1 million to help ward off homelessness in a community still pained by the pandemic.
But her cheer, and that of about 50 other nonprofits across Nebraska, was short-lived.
State officials informed the bunch last week that a cumulative $15.5 million in awards once headed to their agencies for housing stability programs would not arrive after all.
Amid confusion over deadlines, the state must now return the would-be funds for Lift Up Sarpy and others to the U.S. Treasury.
“We’re disappointed,” said Gifford. “The million-dollar grant was huge for us. We are losing the potential to help so many families.”
She views the loss as the latest blow in the often-contentious saga of the federal Emergency Rental Assistance Program that Gov. Pete Ricketts’ administration has managed for all but two of Nebraska’s 93 counties.
A crescendo in controversy came earlier this year when Ricketts rejected a second round of the emergency rent aid, despite the Legislature’s attempt to force him to accept the $120 million. The federal government had set that money aside for struggling renters in the state’s 91 smaller and rural counties.
Ricketts maintained that the worst of the COVID storm was over and that Nebraska should guard against becoming a “welfare state.”
Lawmakers could not muster enough votes to override the governor’s veto.
By then, the Ricketts administration had already accepted and started to disburse the first round of ERAP, though at a slow pace.
(Douglas and Lancaster Counties, as well as the Cities of Omaha and Lincoln, apply for and oversee their own streams of ERAP funding, separately from the state program.)
Of the state’s first round of $158 million for the 91 counties, the Ricketts administration ended up shifting about $97 million, largely to Omaha and Lincoln, saying the state’s larger urban metropolitan communities had greater demand.
Fund distribution update
As of this week, according to the Governor’s Office, the state rental aid program:
* Distributed a total of about $26 million to eligible renters or their landlords in the state’s 91 smaller counties.
* Paid about $10.4 million to Deloitte, an audit and risk management consulting firm, for administrative support related to the program.
* Had about $20 million remaining.
It was from the unspent $20 million that the $15.5 million for housing stability services was to come. Possible uses, the Nebraska Department of Health and Human Services told community agencies vying for the funds, excluded direct rent aid but allowed a range from eviction diversion programs to housing-related services for survivors of domestic abuse.
After initially contacting the selected organizations in mid-August to tell them they would receive a portion of the funding, state officials last week held a virtual meeting and informed them the money instead had to be returned to the federal Treasury.
Aides to the governor blamed confusion on “late” guidance shifts by the Treasury that required the state program not only to assign — but actually to spend — all of the first funding round by Sept. 30, 2022.
Use it or lose it
“These late changes will eliminate the ability for the State to enter into $15.5 million in contractual obligations with housing stability providers,” Ricketts spokeswoman Alex Reuss told the Nebraska Examiner.
Furthermore, she said, qualified renters and landlords who had applied and essentially were pre-approved for emergency rent and utility aid through December would not get that aid beyond Sept. 30.
There is a simple solution to the problem — there always has been.
Nebraska Budget Administrator Lee Will had reached out to Treasury officials to try and remedy the situation. But a letter from the federal agency’s Chief Recovery Officer, Jacob Leibenluft, laid out a chronology of guidance and correspondence that suggests the state should not have been surprised by the Sept. 30 use-it-or-lose-it deadline.
Leibenluft, in the letter to Will, offered what several Nebraska housing nonprofits view as a solution. He said the state could still accept part of the second round of rental aid, which the governor for months has resisted.
“The State of Nebraska could readily take action to avoid any harm to renters or landlords that could arise,” Liebenluft said. Instead of the full $120 million, though, a lesser $48 million now would be available in that second round.
“Treasury stands ready to provide the State of Nebraska up to $48 million in available award funds … to fund the prospective rent and additional housing stability services,” Leibenluft said.
To that, the governor’s spokesperson reiterated Ricketts’ earlier stance.
The matter “was discussed and debated extensively during the legislative session,” Reuss said. ”The state will not be seeking the second round of funding.”
Carolyn Pospisil of Housing Foundation for Sarpy County is frustrated by the circumstances.
The agency she directs had planned to use a $230,000 grant to reconnect with about 900 people that her agency knows had tapped emergency rent aid.
Before the Housing Foundation learned that the award would not be forthcoming after all, it had hired two staffers to create a new outreach program offering budget counseling and other services to ensure that families stay afloat financially.
Pospisil challenged the governor’s assertion that, based on the low amount of rental assistance disbursed by the state, Nebraskans don’t need the help.
She contends that lackluster participation had more to do with a ”cumbersome and complicated” portal system that state vendor Deloitte created to vet applicants.
Pospisil said that as an alternative, her organization chose to turn to philanthropic dollars, about $1 million, to cover emergency rent needs for Sarpy County residents. That private stream of funds has run dry, she said.
She says struggling residents of the 91 smaller and rural counties of Nebraska stand to be hurt most.
“There is a simple solution to the problem — there always has been,” she said.
Housing crunch amplifies stress
In central Nebraska, Liz Mayfield of Grand Island-based Hope Harbor said a lack of public transportation and other support services adds even more barriers for families impacted by the pandemic.
She said all but two of the nonprofit’s shelter rooms are full. With the shortage of rental dwellings in the area, Mayfield said, homeless families who are ready for the next step can’t move out of the shelter.
“There’s so much competition for housing units,” she said.
Mayfield had planned to use a $124,000 grant from the state rent program to alleviate stressors that can lead to homelessness. For example, she said, help for car repairs is essential in a community with no public transit, as a breakdown can spiral into a lost job and eviction.
Mayfield said she does not view the grant mishap as malicious in any way. She hopes the state will reconsider and accept the second round of emergency rent funds.
“For me, it’s just another indicator that Nebraska made a mistake by not taking them,” she said. “It’s being done from a place of privilege and not being clued in or aware of the actual on-the-ground situation.”
Gifford, of Lift Up Sarpy, offered her fast-growing and luxury-home-heavy county as an example of how the impact of the pandemic on some families can be off the public radar.
She said Sarpy has no emergency shelters. Low-income housing is hard to find, she said, and circumstances often push residents into Douglas County to find services.
“I have three veterans and four families in a hotel this week, all waiting for housing to come open,” she said.
State contractor was paid $10.4 million
A private contractor hired by the State of Nebraska to help disburse federal emergency rent aid “flagged” questionable applications for aid that amount to nearly $23 million. That’s just shy of the total amount actually awarded to struggling renters during the vendor’s contract.
Deloitte vetted and approved about $26 million in requests before the Emergency Rental Assistance Program expired Sept. 30, added a spokeswoman for Gov. Pete Ricketts.
The program was intended to prevent pandemic-related evictions in 91 of Nebraska’s 93 counties. Residents in Douglas and Lancaster Counties were served through separate programs.
Alex Reuss, the governor’s spokeswoman, said the state so far has paid Deloitte $10.4 million to administer the program. The contract allowed up to $15.8 million, or 10% of the state’s original award, for administrative capacity costs.
Reuss said that limit remained even though about $97 million of the original $158 million award was reallocated to programs in jurisdictions outside the 91 counties.
Deloitte’s role, Reuss said, was to create the application portal used by more than 50,000 registered users. The vendor processed more than 25,000 applications and used “program integrity efforts” aimed at preventing waste, fraud and abuse.
The Deloitte system, Reuss said, flagged about 1,500 applications. She said the vendor is working with the State Patrol to investigate what she said could amount to the nearly $23 million in fraudulent requests.
Deloitte’s contact center fielded about 46,000 calls over the past 18 months, Reuss said. The contractor also completed monthly and quarterly compliance reporting to the U.S. Treasury.
Erin Feichtinger, a housing and community advocate who has monitored the lifetime of the program, was skeptical about what raised the Deloitte “flag” and how many of the applications were confirmed as fraudulent.
She questioned the contract costs, noting concerns from community groups that the aid application system was tough to navigate.
“I’m not sure what we paid for,” said Feichtinger, now policy director at the Women’s Fund of Omaha. “They were supposed to administer the money and disburse it — and that didn’t happen.”
Reuss said the program operated for over 18 months and called for personal information about applicants and landlords, including a COVID impact statement, wage forms and leases.
“Partnering with Deloitte helped us serve over 25,000 applicants, while preventing fraud and abuse,” Reuss said.